K-Fuel Process and Evergreen Energy Inc.

WPG Resources Limited (ASX:WPG) is examining the potential to develop and use a coal upgrading technology owned by Evergreen Energy Inc (NYSE arca:EEE), known as the K-Fuel® process on it's 100% owned coal deposits in South Australia and on other possible new projects throughout Australia where the technology may offer economic benefits.

WPG also subscribed US$2 million to Evergreen’s recent US$16 million capital raising. This investment has given WPG approximately 3.1% of Evergreen’s voting shares, with warrants to purchase further shares over a three year period.

One of Evergreen’s core businesses is its K-Fuel® clean coal process, which upgrades low value sub-bituminous coals and lignite to higher rank thermal coal quality. K-Fuel® is one of a new generation of energy processes that can significantly reduce air emissions and other pollutants from coal-burning power plants.

The K-Fuel® approach increases the heating value of low-rank fuels while decreasing the environmental impact of coal energy production. This is accomplished by refining coal before it is burned to increase energy densities and combustion efficiencies and reduce greenhouse gas emissions. Evergreen’s 750,000 tpa demonstration plant at Fort Union in the Powder River Basin (PRB) in Wyoming operated from December 2005 to March 2008, when operations were idled as part of Evergreen’s response to the global financial crisis. Based on the feedstock, test work has shown that PRB coals can be upgraded from a calorific value of 4,500 kcal/kg and 31% moisture to 5,600 kcal/kg and 15.5% moisture. Generally similar upgrading results have been achieved with Indonesian coals. Test burns of the KFuel® product in several US power stations have validated the process.

In September 2011 Evergreen completed test work on Penrhyn coal seam samples. Results have shown that the K-Fuel® process has the ability to upgrade the Penrhyn coal to an export grade fuel product with a calorific value that is shippable of at least least 5,000 kcal/kg. This represents an increase of approximately 25% to 40% over the unprocessed coal. In addition the K-Fuel® process was able to reduce sodium by up to 50% and chloride by up to 70% in the final product.